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The statutory timetable for the in-depth Phase II investigation was 24 weeks and the final report is expected to be published before Christmas.

A provisional findings report published today notes the CMA panel gathered evidence from Tesco and Booker as well as from 65 wholesalers, suppliers and retail chains and from a survey of “hundreds of retailers”.

Tesco and Booker both welcomed the CMA's provisional findings

It found Tesco as a retailer and Booker as a wholesaler “do not compete head-to-head in most of their activities”, adding: “In particular, Tesco does not supply the catering sector to which Booker makes over 30 per cent of its sales.”

The CMA said it also considered the impact of the merger in every local area where a Tesco and a Booker-supplied shop are present, which adds up to more than 12,000 shops, to examine whether it might be profitable for the merged business to raise prices or reduce service levels.

It has provisionally concluded, “the level of competition in the grocery wholesale and retail markets would be sufficient to defeat such a strategy”.

The CMA said a number of competing wholesalers raised concerns Booker would benefit from improved supplier terms post merger, making it difficult for them to compete and as a result, Booker may then be left in a position where it can raise prices to the shops it supplies.

However the watchdog rejected this argument, noting Booker “would be able to negotiate better terms from a number of its suppliers for some of its groceries, and that it was likely to pass on some of the benefits of these savings to the shops that it supplies”.

It adds: “This might increase competition in the wholesale market, as well as reducing prices for shoppers.

“However, the CMA also concluded that the wholesale market would remain competitive in the longer term, noting that Booker's share of the UK grocery wholesaling market - at less than 20 per cent - was not sufficient to justify the longer-term concerns.”

Tesco said the deal would deliver “significant value to shareholders” by combining both firms' retail and wholesale expertise, supply chain and digital capabilities and deliver “significant revenue and cost synergies”.

The CMA launched a phase 1 investigation into the proposed tie-up in May to assess “whether the deal could reduce competition and choice for shoppers and other customers, such as stores currently supplied by Booker”.

The group has around 18,000 product lines, ranging from branded and own label grocery, fresh and frozen food, beers, wines, spirits, tobacco and non-food items.

Booker also has more than 4,800 independent retailers trading under its Premier, Family Shopper, Budgens and Londis brands.

Tesco operates more than 3000 stores across the UK and Booker supplies services to more than 5,000 'symbol' stores.

Tesco believes the merger will widen its offering across retail and eating out locations and into the faster growing 'out of home' food market as well as offering suppliers “strong growth prospects and a clear opportunity to develop better own brand and fresh ranges”.

Commenting on the CMA'a provisional findings, inquiry group chair Simon Polito said: “Millions of people use their local supermarket or convenience store to buy their groceries or essentials.

“Strong competition in the market ensures that shoppers can choose the best deal for them.

“Our investigation has found that existing competition is sufficiently strong in both the wholesale and retail grocery sectors to ensure that the merger between Tesco and Booker will not lead to higher prices or a reduced service for supermarket and convenience shoppers.”

Tesco notes it “welcomed” the CMA's provisional findings, adding: “We look forward to creating the UK's leading food business, bringing together our combined expertise in retail and wholesale. “This merger has always been about growth, and will bring benefits for independent retailers, caterers, small businesses, suppliers, consumers, and colleagues.

“We will continue to work with the CMA as it prepares the Final Report due by the end of December.

“We anticipate completion of the merger in early 2018.”

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In a statement to the stock exchange, Booker said: “We are pleased that the CMA has provisionally concluded that this transaction does not lessen competition, and will continue to work with the CMA ahead of its publication of a final decision, expected in December.

“We are grateful for the support of customers, suppliers and colleagues during this process.”